October 3, 2013 9:38:20 AM
JACKSON -- Mississippi Power Co. says its Kemper County power plant won't be finished by the original May 2014 deadline, but will start service sometime later that year.
The unit of Atlanta-based Southern Co. will have to repay $133 million in federal tax credits it received with the condition of meeting the May deadline.
Mississippi Power President Ed Holland had warned of possible delays in a recent interview with The Associated Press.
In a stock filing, Mississippi Power says there could be further cost overruns at the $4.75 billion project, which includes a power plant, a lignite mine and pipelines. Southern Co. has already written off $990 million in costs, but says the tax credit repayment announced Wednesday won't cause another direct charge against profits.
The company says it could seek to recover additional interest costs from ratepayers, but that would have to be approved by the Mississippi Public Service Commission.
Spokeswoman Amoi Geter declined to say how the company might seek repayment. In a January settlement with the PSC, Mississippi Power agreed to recover most of the interest charges from money it borrowed to build the plant through the sale of up to $1 billion in bonds. Ratepayers would repay the principal and interest on those bonds, but the company wouldn't make any profit.
Under the settlement, Mississippi ratepayers would also pay $2.4 billion of the plant's price in traditional rates.
The PSC voted 2-1 to approve a 15 percent rate increase to start paying off the plant's debt even before it begins operations, followed by an additional 3 percent increase in 2014. Mississippi Power has said it's likely in 2014 to seek an additional increase of at least 4 percent over 20 years to pay off the bonds.
Mississippi Power received tax credits in 2009 to encourage it to build a coal-fueled power plant emitting less carbon dioxide. The company blames its inability to meet the five-year deadline on rainy weather and additional work that became necessary. But with 6,000 workers on the site, Holland has said things are so congested that it can be hard to squeeze workers into the same spaces, meaning the productivity of additional workers is reduced.
Northern District Commissioner Brandon Presley said meeting the deadline for the tax credits was part of the political push to get the plant approved by the PSC in 2010.
"This was part of the rush to get Kemper shoved through," said Presley, who has consistently opposed the plant.
Monitors employed by the Public Service Commission had warned work was behind in recent months.
"For a project this size, it's not unusual or surprising to me that there's a delay in the completion date," said Southern District Commissioner Steve Renfroe, recently appointed by Gov. Phil Bryant. Renfroe is a former employee of Chevron Corp.'s massive refinery in Pascagoula.
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